As more labour is hired,moving along the production function,diminishing returns occur because

Question

Quizplus · Accepted Answer

Diminishing returns occur when adding more units of one input while holding all other inputs constant leads to a decrease in the marginal product of that input. This is because, as more labor is hired, there are fixed quantities of other resources such as capital and land, which cannot be increased in the short run. Therefore, each additional unit of labor will have less and less capital or land to work with, resulting in diminishing marginal returns.

As More Labour Is Hired,moving Along the Production Function,diminishing Returns